Good morning!
Grains pull back overnight... Corn, soybeans and wheat faced price pressure overnight, despite what appeared to be some positive trade talks. As of 6:30 a.m. CT, corn futures are trading 2 to 3 cents lower, soybeans are 4 cents lower and wheat futures are mostly 2 to 4 cents lower. The U.S. dollar index is up around 225 points and front-month crude oil futures are modestly lower.
U.S. and China to resume trade talks after ‘very positive’ Trump/Xi call... The U.S. and China have agreed to hold additional trade discussions following a lengthy and reportedly “very positive” phone call between President Donald Trump and Chinese President Xi Jinping on Thursday. According to U.S. officials, the call focused on recent tariff escalations and potential avenues to revive stalled trade negotiations. The addition of Commerce Secretary Howard Lutnick in upcoming trade talks signals Trump may be willing to consider reversing some of the technology curbs that threaten to hobble China’s long-term growth ambitions. Xi’s statement after the call also made clear he expects the U.S. to “remove the negative measures taken against China,” which could include warnings against the use of Huawei‘s Ascend chips and restriction on the sale of chip design software to China. A date for the next round of formal trade talks has not been announced, but U.S. officials indicated they are aiming to arrange face-to-face meetings before the G20 summit in Osaka next month.
Japan/U.S. trade talks intensify ahead of G7 summit... Japan and the U.S. are engaged in high-stakes trade negotiations in Washington, aiming to finalize a broad agreement before the upcoming G7 summit in Canada. Led by Japan’s chief trade negotiator Ryosei Akazawa and U.S. Commerce Secretary Howard Lutnick, the talks focus on resolving escalating U.S. tariffs and forging deeper economic cooperation. Japan is pushing for relief from U.S. tariffs — especially the 25% auto levy and the looming across-the-board increase to 24% in July. In exchange, Tokyo is offering to expand Japanese vehicle manufacturing in the U.S. and help boost U.S.-made auto exports abroad. This marks a shift from Japan’s prior stance of demanding immediate tariff repeal, now opting for a phased rollback tied to investment. In response to Chinese export curbs, Japan is proposing joint development of rare earth supply chains with the U.S., including processing hubs in third countries. Talks are also targeting non-tariff barriers, with Japan open to increased imports of U.S. agricultural goods and cooperation on semiconductors and shipbuilding. Japan’s openness to naval maintenance collaboration highlights the alignment of economic and security interests. This is the fifth high-level meeting in recent weeks, underlining the pressure to strike a deal before tariff hikes and the G7 gathering. Prime Minister Shigeru Ishiba and President Donald Trump are expected to meet at the summit’s sidelines.
EU open to some ag concessions in trade talks... The European Union is open to lowering tariffs on U.S. fertilizer imports as an offer in trade talks with the Trump administration but will not weaken its food safety standards in pursuit of a deal, EU agriculture commissioner Christophe Hansen told Reuters. Hansen said the EU was also open to discussing purchases of more hormone-free beef from the United States.
Slowdown in jobs growth expected in May... Economists polled by Reuters expect the Labor Department to report non-farm payrolls increased 130,000 in May, which would be down from 177,000 jobs added the previous month and the lowest since last October. The unemployment rate is expected to hold at 4.2%.
RFS lobbying surge intensifies as OMB adds more meetings... The Trump administration is facing mounting lobbying pressure as additional meetings have been scheduled for the EPA’s “Renewable Fuel Standard (RFS) Program: Set 2” proposed rule, now under formal review at the Office of Management and Budget (OMB). As of this week, 24 meetings have either been completed or are on the books — an unusually high number signaling intense industry interest. In parallel, the final rule on the partial waiver of the 2024 cellulosic biofuel volume requirement is also drawing significant attention. Observers say the frequency of these meetings — along with the diversity of participating stakeholders — suggests EPA remains on track to announce final rules in June, though past precedent shows that later-scheduled meetings are sometimes cancelled without explanation. The intensity of these sessions reflects deep concerns across both biofuel producers and obligated parties over volume mandates, compliance costs, and pathways for renewable gas.
Ukraine expects reduced grain exports in 2025-26... Ukraine expects its 2025-26 grain exports to fall to between 35 MMT and 40 MMT, depending on harvest volume, its first deputy agriculture minister Taras Vysotskiy told Reuters. He said that grain exports might include about 14 MMT to 15 MMT of wheat. Through the first 11 months of 2024-25, Ukraine exported 38.5 MMT of grain.
Global food prices dip in May... The UN Food and Agriculture Organization global food price index declined 0.8% in May, driven by lower global prices for corn, palm oil and sugar, but remained 6.0% higher than last year. Compared to year-ago, prices rose 6.8% for meat, 21.5% for dairy and 19.1% for vegoils, while values fell 8.2% for cereal grains and 6.6% for sugar.
Japan will use ‘all options’ to stabilize rice prices... Japan said “all options” were being considered to stabilize rice prices, including the use of up to 100,000 MT of tariff-free staple rice the government imports a year, and further emergency imports beyond that quota. Japan has so far earmarked about 600,000 MT of rice for release from its emergency stockpile in an effort to lower prices. Japanese Agriculture Minister Shinjiro Koizumi has said he was ready to release the entire stock – or another 300,000 MT – as needed.
Rumo nixes deal to sell stake in Brazil port terminal to Bunge, Zen-Noh Grain... Brazilian rail operator Rumo said it has decided to terminate a 2024 agreement to sell part of a terminal at Brazil’s largest port to Bunge and a subsidiary of Japan’s Zen-Noh Group. In a securities filing, Rumo said that conditions set in the agreement for the 50% stake in the XXXIX terminal, located in the Santos port, were not fully satisfied before the established deadline. It did not provide further details.
Brazil’s May poultry exports clipped by HPAI outbreak... Brazil’s poultry exports fell 12.9% to $655 million, while volumes declined 14.4% to 363,100 MT. Trade restrictions following a highly pathogenic avian influenza (HPAI) case in mid-May weighed on exports.
Cattle futures, cash price surge... Cattle futures surged to new highs on Thursday, which resulted in an all-time high of $223.00 on the continuation chart. At that level, futures remain well below the cash market, which traded $5.00-plus higher, with most feedlots in the northern dressed market holding out for even higher bids.
Cash hog fundamentals continue to strengthen... The CME lean hog index is up another 82 cents to $97.57 as of June 4. Pork cutout firmed $1.50 to $108.12 on Thursday. Both are trading at their highest levels since August 2023.
Overnight demand news... Exporters reported no tenders or sales.